Philip Hammond, the Defence Secretary, warns against further 'significant
reductions' in the defence budget

Philip Hammond has warned David Cameron that making deeper cuts to the armed forces would have "meaningful consequences".

The Defence Secretary suggested that while the Ministry of Defence can "live with" its current projected budget up until 2020, further cuts could prove damaging.

A total of 30,000 Armed Forces job cuts have been outlined since the Government's Strategic Defence and Security Review in 2010. The regular Army has borne the brunt and been told it must cut numbers from 102,000 to 82,000 by 2020.

Mr Hammond told a conference held by the Royal United Services Institute that the Coalition has taken decisions which have been "ducked" by previous governments and the Ministry of Defence has become "very much more efficient".

However, there is growing concern that the Ministry of Defence's Budget could be subjected to further cuts after the election next year when a new strategic review will be held.

Mr Hammond said that spending on the armed forces is only likely to increase if more money becomes available as the economy recovers, if public opinion changes or there is a new "strategic position".

He said: "We have a forward trajectory agreed with the Treasury on which we plan defence. It is a tight trajectory, but it is one that we can live with.

"We have become very much more efficient at the way we do things and over the last three years we have made very significant progress in making our programme sustainable, getting projects increasingly to deliver on budget and addressing some of the long term challenges ... which were ducked for many years.

"But it is clear to me we couldn't take further significant reductions in the defence budget without it having some very meaningful consequences.

"I speak for the Armed Forces chiefs in saying that we can live with the Budget trajectory that we're planning. Of course we can always spend more money if it became available as the economy recovers or if the strategic position were to change and public opinion were to change."

His comments came after one of Britain's most senior generals said that British troops should be permanently stationed in the Baltic States as part of a Nato task force to deter an invasion by Russia.

General Sir Richard Shirreff, the former Nato Deputy Supreme Commander, said that at present Nato forces would be unable to respond if Vladimir Putin, the Russian President, ordered a "sudden attack".

He told MPs that the only way to "absolutely guarantee" that countries like Latvia, Lithuania and Estonia are protected from Russia is to "have troops in place".

He said: "There is a Russian aviation base within 45 minutes flying time of Riga. Unless Nato has stationed forces within the Baltics I think it's highly unlikely that Nato could respond to a sudden attack.

"The only way you can absolutely guarantee deterring is if you've have troops in place. That means some form of permanent basing."

However Philip Hammond rejected the suggestion, arguing that Russia does not pose an "existential" threat to Britain.

He later told the Defence select committee: "It's not the government's view and it's not Nato's view. He [Shirreff] is a retiring general. He can speak for himself but he does not speak for the department."

Asked about Russia’s invasion of the Crimea, Mr Hammond added: “Democracy is our great strength, it gives us the moral high ground it gives us the resilience.

“But democratic systems are less agile and less quick and decision making. In the course of the Russia Ukraine situation we have seen decision making on one side concentrated in the hands of a single person able to make decisions in a split second. Inevitably we are slower to respond than an autocracy.”